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DAILY NEWS ANALYSIS

  • 01 April, 2021

  • 4 Min Read

Insurance Amendment Bill, 2021

Insurance Amendment Bill, 2021

The government introduced a bill in Rajya Sabha to amend the Insurance Act, of 1938 and raise the foreign direct investment cap to 74% from 49%.

Provisions:

  • The Act allows foreign investors to hold up to 49% of the capital in an Indian insurance company, which must be owned and controlled by an Indian entity.
  • The Bill increases the limit on foreign investment in an Indian insurance company from 49% to 74%, and removes restrictions on ownership and control.
  • However, such foreign investment may be subject to additional conditions as prescribed by the central government.
  • The Act requires insurers to hold a minimum investment in assets which would be sufficient to clear their insurance claim liabilities.
  • If the insurer is incorporated or domiciled outside India, such assets must be held in India in a trust and vested with trustees who must be residents of India.

Insurance companies are facing liquidity pressure and the higher limit would help meet the growing capital requirement.

Source: TH


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